Is the market turning bullish on Domain Holdings Australia Limited?

Is the market turning bullish on Domain Holdings Australia Limited?

Marginal Rise in Total Revenues: Domains Holdings Australia Limited (ASX: DHG) has lately disclosed that in accordance with ASX Listing Rule 3.10A, 2,175,316 fully paid ordinary shares in the company held under voluntary escrow was released from voluntary escrow on 29 March 2019. These shares are currently quoted on the Australian Securities Exchange and relate to the acquisition of Review Property.

Also, in another development, the company stated that one of the Directors of the company, Mr. Jason Pellegrino, who held 732,791 shares, acquired 1,515,789 unquoted options exercisable at $3.1606 for a non-cash consideration as on 1 March 2019. Hence, after this development, Mr. Jason Pellegrino holds 732,791 shares in his indirect capacity and 1,515,789 unquoted options exercisable at $3.1606 in a direct capacity. The purpose for this change in interest can be attributed to the Executive Incentive Plan, as set out in an earlier ASX Announcement stating the appointment of Mr. Pellegrino as approved by shareholders at the company’s AGM held on 20 November 2018.

As per the results for the half-year December 2018, the total group revenues saw a growth of 0.3% and stood in at $183.9 million. This marginal growth was on the back of an increase in residential revenue by 8.6%, agent service revenue, which rose by 15.2% and a revenue rise of 33.90% in customer solutions segment. This rise was partially offset by the decline of 10.1% in the media, developers and commercial revenue. The company posted an EBITDA of $52.7 million, down 7.1%; also, the EBIT came in at $38.4 million down 12.0%. The company had posted an NPAT of $21.1 million, down 14.2%, resulting into EPS of 3.64 cps, down 15.1%.

As at December 2018, net debt was $121.1 million. A dividend of 2 cps (100% franked) was declared, resulting in a payout ratio of 55%. The accounting impact of the impairment charge has put constraints on the dividend paying capacity for 1H FY 2019. The dividend capacity is anticipated to be restored to normal and supports a higher dividend in H2 of at least 4 cps (in-line with FY18 H2).

As regards the outlook, for FY19, the company’s underlying costs are expected to be slightly less against proforma FY18. The continued investment in growth initiatives is anticipated to be well supported by ongoing cost discipline initiatives.

On the stock-performance front, the stock has posted the YTD return of 31.08%. The company also has posted returns of -16.62% over the past six months. At market close on 4th April 2019, the stock of the company traded at a price of A$2.94, up 1.031% during the day’s trade with a market capitalisation of ~A$1.7 billion. The stock opened the trading day at A$2.890, reached an intraday high of A$3.020, and touched an intraday low of A$2.830, with a daily volume of 6,553,008. It had a 52-week high price of $3.640 and a 52-week low price of $2.060, with an average volume of ~1,652,561.


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